E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
With a limited amount of shelf space to display a virtually unlimited number of software titles, CompUSA is expanding its software offerings with a new web-based system that lets customers order software on-demand. Instead of adding to in-store inventory, it burns software CDs in-store.
Retailers for several years have used web sites to expand online the number of products they can offer beyond the physical limitations of their stores. Now CompUSA is using the web to expand the number of software products it can offer in-store-even getting into new categories-without stocking extra inventory. “Our strategy is to offer a very wide range of software that isn’t available anywhere else at retail,” says senior buyer Dewey Thoes.
With a new web-based, just-in-time system of sourcing software products, CompUSA plans to offer niche products that in the past would have been too unprofitable to carry in-store-including professional architecture and accounting software-due to high costs and a limited number of customers for each niche. “This allows us to get into software product categories that wouldn’t be feasible for us otherwise,” Thoes says.
CompUSA has already nearly doubled its number of available in-store software titles to about 1,200 by using the web-based SoftwareToGo system from ProtoCall Technologies Inc., Thoes says. It expects to continue growing that number as it uses the system to offer software for several niche markets.
The slow turnover and high price of many niche software products, which can cost $1,000 or more, make it too costly to build in-store inventory with them, Thoes says. But by making a large enough number of niche products available on a just-in-time basis, he adds, CompUSA figures it can turn a profit on them while building a reputation as a store where customers can find virtually any software product.
To use the SoftwareToGo system, customers search for software titles on an in-store kiosk, then print out an order form and hand it to a cashier. The clerk then sends the customer’s request over the web to ProtoCall, which sends back a digital de-encryption key to let the retailer unlock encrypted software content stored on an in-store computer and burn the content onto a CD. The entire order-to-burn process takes about 5 minutes, Thoes says. ProtoCall also forwards the order information to the software publisher, freeing it from the chore of dealing with hundreds of retailers.
The system, which debuted in more than 20 CompUSA stores last month and will be rolled out to all 227 stores this year, is already proving popular among store customers, Thoes says. “Sales through SoftwareToGo have been going up every day,” he says.
While in the roll-out phase, Comp-USA will rely on in-store promotion for the new service, including placing the kiosks in endcap locations and highlighting them with signs. Once the service is in all stores, it will promote the software in all its usual advertising, including weekly fliers and e-mails.
ProtoCall is looking into applying the SoftwareToGo technology for other types of digital products, including digital games, books and movies, says CEO Bruce Newman. “This will enable digital publishers to get more products into stores, and retailers will never have to worry about being out of stock,” he says.